The Queensland Resources Council has developed a new code of conduct which it hopes will increase the amount of business flowing to local suppliers of goods and services.
The initiative, launched earlier this month, will encourage voluntary compliance by mining companies and is consistent with the State Government’s pledge to eliminate red tape.
Miners previously had to draft a local industry participation plan, which some considered a costly and burdensome regulatory hurdle.
The new self-regulation regime is the first of its kind in the country and many believe it could provide a template for similar undertakings in other states, particularly if the Coalition wins the federal election.
QRC chief executive Michael Roche said mineral and energy projects in the state already sourced about 75 per cent of their goods and services from Queensland suppliers. The total value of that engagement reached about $28 billion last year.
Mr Roche said there was still room for improvement, particularly among small to medium-size enterprises.
The new code calls for local businesses to be given “a full, fair and reasonable opportunity” to tender for projects at both the construction phase and operational life.
“We think we’ve come up with a better way that doesn’t involve more regulation or more public servants. We’re committed to this,” Mr Roche said.
The “local content” guidelines were established with the assistance of the Australian Industry Group (AIG), the Australian Steel Institute (ASI) and a range of company experts.
Mining companies will provide annual reports on their efforts to the QRC and the State Government.
Mr Roche said the incentive for companies to abide by the code was based on “reputation and a social licence to operate”.
“If suppliers don’t see performance, they will say so. If we fail, the threat will be there for the government to come back in and regulate,” he said.
AIG state director Mark Goodsell praised the plan as “a good start and a good initiative” but he said it now needed to be acted upon.
“We’re not asking for an unfair advantage,” Mr Goodsell said. “We’re concerned about reverse snobbery, which suggests local companies couldn’t supply these global scale projects.
“We just want a full and fair opportunity. The test will be a year or two down the track when we see whether there has been some improvement.”
John Gardner, Queensland and Northern Territory manager with the ASI, offered an equally cautious endorsement.
“We support this initiative and are part of the steering committee. It is too early to tell whether this will bring more steel jobs to Queensland, but we are optimistic that it will,” Mr Gardner said. “We’re hoping for the best. We’re withholding our judgment until we see the first round of results coming through.”
He said there were 203 metal fabricators across Queensland in 2008 but that number fell by 27 per cent to 148 by 2011.
These businesses were only retained on about 10 per cent of the new construction work in the resources sector, he said.
It is understood that some proposed projects had key specifications based on foreign standards, which effectively shut out Australian-based bidders. High input costs and the until-recently high Australian dollar have also not helped local operators.
Mr Gardner noted that the QRC code does not override federal law, such as the recently passed Australian Jobs Bill that calls for Australian Industry Participation Plans for all projects over $500 million.
Andrew Northcott, the managing director of Brisbane-based Labour Solutions Australia, has been supplying workers in the mining and energy sectors for nine years and believes local firms can compete against international players.
“We have had to be innovative and forward thinking to compete at that top tier level and we’ve proven we can do that,” he said. Mr Northcott said local firms offered unique advantages to Queensland-based resource companies.
“One of the big things that we have is flexibility,” he said. “That means that we can get efficiencies that perhaps larger players can’t.
“We also understand the issues on the ground.”
In the southwest Queensland town of Roma, they are taking the “buy local” message to heart. Last week, Commerce Roma and Santos GLNG announced a year-long program that will encourage residents to shop locally and help businesses be more competitive in the local market.
Commerce Roma executive officer Sharyn Garrett said Shop Local Invest Local was the first program of its kind in the region.
“BUY Local” is the latest mantra of the Queensland mining industry
“We’ll be actively engaging with local business to find out what skills or services are lacking and how we can directly address the issues,” she said. “Often we hear that people have purchased things from out of town because they didn’t know the product or service was available here.”
Santos GLNG Maranoa regional manager Sam Klaas said the campaign was an important initiative to ensure local businesses continued to be viable and profitable.
Santos GLNG is a $US18.5 billion project that will link the gas fields of southwest Queensland to Gladstone where coal seam gas will be converted at a processing facility on Curtis Island into liquefied natural gas for export.
The project, backed by energy giants Santos, Petronas, Total and Kogas, has poured more than $95 million into the Maranoa region, which includes the CSG-hubs of Roma and Dalby, since 2011.